The typical receivable is outstanding for ~90 days. Although the range is very wide depending on customer size, the typical receivable has a median and average DSO of 83 and 81 days respectively. If you’re receivables are aged well outside 90 days, in a normal environment you wouldn’t be out of line asking customers to pay faster. If in the current environment your receivables are blowing out, that’s understandable. Make sure you’re in touch with slow paying customers frequently, offer discounts for quick payment (1% to 2% is normal), or suggest payment plans. Don’t let slow paying customers go silent on you and don’t just cut them off from your product without trying to work towards a solution.
Software companies pay vendors quickly. On the flip side, the DSO for payables is only 11 days on median. Software companies tend to pay their costs quickly, maybe a little too quickly. Vendors shouldn’t get upset with you if payments are made 30 days from invoicing.
Visit us at blossomstreetventures.com and email us directly with Series A or B opportunities at email@example.com